We are in an extraordinary period for both global health and the global markets. Just as governments attempt to grapple with the spread of Covid-19, markets have been significantly affected and uncertainty has defined the last month.
While this is, first and foremost, a global health crisis, when valuations are low, opportunities are presented to investors to get into the market for a fraction of the price and benefit from the potential of stronger long term returns.
Just as we encourage anyone with existing investments to keep the faith and maintain a long term investment outlook, it’s important to see the current volatility in the markets within the context of this broader picture.
Missing out on periods of recovery can be expensive and selling at the bottom is a surefire way to cement the losses suffered in the downturn.
On the contrary, now is a good time to consider investing in global markets. While there is no guarantee that conditions will improve quickly, those that make investments at or near the bottom of the dip will see the greatest returns when the eventual recovery begins.
Investors with longer time horizons are in a position of relative privilege when it comes to fluctuations in the market. At Moneyfarm, we have built our investment strategy around the longer-term perspective. An ability to withstand short term fluctuations puts an investor in a position to capitalise on long term growth and periods of recovery.
Don’t miss out on the recovery
Historically, periods of significant decline tend to precede periods of significant growth as markets recover. This represents a huge opportunity for anyone who hasn’t yet filled their ISA or pension allowance for the tax year, or wants to proactively use their allowance for the coming tax year, to invest at a discounted rate and reap the benefits as the recovery takes place (regardless of how long this takes).